WASHINGTON - Employment accelerated in October as company payrolls expanded the most in eight months, an indication the U.S. labor market was on the upswing at the start of the fourth quarter, according to a private report based on payrolls.

The 158,000 increase followed a revised 114,000 gain in September, data from the Roseland, N.J.-based ADP Research Institute showed today. This is the first ADP report derived using a larger sample and new methodology.

Quicker job creation suggests confidence among businesses is holding up in the face of the so-called fiscal cliff, an onslaught of tax increases and spending cuts in place for next year should Congress fail to act. A Labor Department report tomorrow may show private payrolls increased by 124,000 in October while the unemployment rate rose to 7.9 percent, according to the median estimate in a Bloomberg survey.

“October is a continuation of the labor market’s somewhat better performance in the third quarter,” Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “If jobs are going to grow in the fourth quarter at a pace similar to the third, we’re going to have 2 percent GDP growth, which seems to be the groove that we have worn into the economy.”

The median forecast of 37 economists surveyed by Bloomberg projected a 131,000 advance. Estimates ranged from 80,000 to 170,000. The previous methodology showed a gain of 162,000 jobs in September.

Moody’s analytics

Today’s report represents a break from the way ADP had calculated employment figures dating back to 2001. Today also marks the first joint release with Moody’s Analytics Inc. of West Chester, Pennsylvania. ADP had previously collaborated with Macroeconomic Advisers LLC of St. Louis.

The report now draws on data from 406,000 of Automatic Data Processing Inc.’s corporate customers, up from the 344,000 used in the prior method. Those customers employ 23 million workers, or more than 20 percent of all non-government staff, ADP said in press release announcing the changes on Oct. 24.

Additionally, ADP and Moody’s said the new methodology they developed will better align their figures with those from the Labor Department’s monthly payroll report. The methodology uses data from ADP customers, the Labor Department and the Federal Reserve Bank of Philadelphia’s Aruoba-Diebold-Scotti Business Conditions Index. ADP said its numbers should correlate most closely with the final, revised Labor Department figures, rather than those initially released at the beginning of the month.

Service providers added 144,000 new jobs. Businesses involved in financial activities boosted staff by 9,000, professional and business services increased headcount by 35,000 and trade, transportation and utilities added 24,000 more workers.

Companies employing 500 or more workers added 81,000 new jobs in October. Employment at medium-sized businesses, with 50 to 499 workers, rose 27,000, and by 50,000 at small companies, ADP said.

Tomorrow’s Labor Department report may show overall hiring including government jobs rose 125,000 last month after rising 114,000 in October, according to the Bloomberg survey median.

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